Jul 10, 2008

Business - From Clicks to Bricks Part 2

Today, in the second part, we look at how a consumer behaves differently offline vis-à-vis at an online marketplace and the factors that contribute to the success of such offline stores, as, for instance, location. Different strokesInterestingly, the target group and consumer behaviour both change when moving from online to offline. Online customers are younger, while offline customers tend to be more broad based. The degree of involvement too differs. Take Zapak’s experience. Rohit Sharma, chief operating officer, Zapak Digital Entertainment, says, “Online gaming has two segments of gamers – casual and hardcore. The casual gamer plays games online. The age band for casual gamers is six to 35 years, whereas hardcore gamers, who play in Gameplexes, are between 12 and 25.” Since their launch in August last year, occupancy levels have shot up to 50 per cent in all 21 Gameplexes, with average footfalls of 900 a day. Each Zapak Gameplex has between 35 and 50 seats. It offers membership packs ranging between Rs 50 and Rs 2,500 to gamers. Matrimony is a different ballgame. The core profile of members on Shaadi.com is Indians between 21 and 35 years because they are considered to be in the ‘marriageable’ bracket. But the matrimonial sites’ centres cater to a wider audience of parents, family and siblings of prospective brides and bridegrooms. Shaadi’s membership fees range from Rs 2,501 for three months to Rs 15,001 for a year. In travel, buying behaviour moves from purchasing airline tickets to handling larger transactions such as holiday packages at retail stores. Holiday packages, which are a high involvement product, require a different strategy to sell. Customers have many questions and concerns, especially when it comes to travelling overseas or on a long itinerary to multiple destinations in a country. Says Deep Kalra, founder and chief executive officer, MakeMyTrip, “While they are happy to research online, we have experienced that the buying decision requires physical reassurance.” The plotting of a storeUnderstanding consumer behaviour is certainly as important as in any other business. But while online companies are normally accessible beyond geographical boundaries, these companies often have to take strategic decisions regarding location when it comes to offline stores. Travelguru, for instance, looked at launching stores in metros and Tier II cities and places which get high footfalls traditionally. A shopping mall is a great place – people can spend their weekends and also get their vacations planned. Travelguru Holidays stores have an average size of 500 square feet. “In the case of a shopping mall outlet, the customer can discuss the itinerary according to his requirements with the Travelguru staff and get hotel/ holiday vouchers at the end of his mall visit,” says Amit Kapoor, associate vice-president, business development, Travelguru, explaining the other benefits these stores offer.Cleartrip chose to launch kiosks in Big Bazaar outlets because they offer the right environment to reach out to millions of middle class Indians across the country. Zapak, on the other hand, has a young TG and the idea was to target youth hangout locations. It went for areas that see high footfalls from this TG and locations that were easily accessible. BigFlix, a home entertainment provider, looked at factors like high access areas and convenient neighbourhood locations to set up stores.Jeevansathi.com has 25-30 Match Points, each measuring 250-300 square feet in North and West India. Jeevansathi’s offline business will also capitalise on Naukri.com’s existing network of 61 offices. This network of offices is spread across the metros and Tier II cities in India. In each of the offices, manpower will be added and trained to be Jeevansathi counsellors.The Shaadi and BharatMatrimony Centres work on a franchisee model. In the former, franchisees need to make an investment of between Rs 7 lakh and Rs 12 lakh. Every centre has trained professionals as advisors and standardised services to help parents of prospective brides and bridegrooms. Everyone involved hopes that these brick and mortar outlets will cement more deals for them.The argument for onlineWill the future see more offline ventures springing up? Despite their offline jaunts, most don’t believe that offline will proliferate. Stuart Crighton, founder and COO, Cleartrip.com, for one, says that the website has taken a conscious decision to stay focused on the web (online sales contribute 95 per cent of its business). Ninety per cent of Yatra’s business too comes from online. MakeMyTrip gets 80 per cent of its revenue from online and 20 per cent from offline. Ram Badrinathan, senior director research, PhoCusWright, a US based travel market research firm with offices in Mumbai, says that despite the growth in offline stores, India will remain a technology enabled online model and real business can only be built through direct online distribution. According to him, the real estate costs, particularly in urban India, will prevent a burst of offline stores. And an offline presence of just a store or three in a city doesn’t help the brand at all. Some such as Bengaluru based Seventymm, a DVD rental firm which acquired 100 per cent equity of the Delhi based Madhouse, will have no truck with offline setups, though it does go in for below-the-line activities and roadshows. Says Subhanker Sarker, COO, “This is an eyeball to eyeball interaction where we explain to people how our online rental works. Our customers are looking at an enriching home video watching experience. We have no plans to launch stores anytime soon.” eBay India has ventured offline with initiatives like Trading Posts (offline centres where members walk in and place their listings) and Trading Points (in cyber cafés where a Web Guide helps eBay members and others in transacting on the site), but standalone stores are a no-no. “We’re not looking at launching eBay stores. We manage to reach our target audience online itself. Of the total online population of about 35-50 million, only around six million are online ‘buyers’. So, there’s a huge potential and we are looking to convert people into online buyers,” says Deepa Thomas, senior manager, pop culture, eBay India. Badrinathan feels that it will be difficult to drive substantial sales from offline stores. So, all pointers indicate that online will continue to be the primary driver with a few offline ventures providing just the right amount of impetus.